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ISLAMABAD: Federal Tax Ombudsman Dr Asif Mahmood Jah (FTO) has directed the Federal Board of Revenue (FBR) to issue instructions to field formations to avoid futile litigation and wastage of public resources (taxpayer’s money).

In a landmark order issued by the FTO, Dr Jan observed that it is the need of the hour that appeals should not be filed as a matter of routine or because a decision has been rendered against the department. Decisions should be taken on a reasonable basis. It is not advisable for government departments to waste public time and money by filing appeals routinely, FTO order added.

When contacted Waheed Shahzad Butt advocate who has represented this case before the FTO, told this scribe that it is a landmark order of its own kind from the forum of FTO since the inception of the FTO office in the year 2000. The complainant questioned the working of FBR being engaged in the futile litigation in courts.

He said that it is the duty of FBR to dispense justice and functionaries representing FBR are supposed to uphold the dignity of law. On the other hand, due to ongoing practice under the powers available with IRS officials, the process of law is being violated by some tax officials. It is well known that the government is the largest litigant in courts being a “compulsive litigant” because the expense is on the government. This happens because FBR offices involved in frivolous appeals are not personally responsible for the said litigation.

FTO order states: “order under section u/s 122(1) of the Income Tax Ordinance, 2001 suffers from serious violations of legal provision, deviations from departmental norms and practices and arbitrariness. What was the definite information? The same alleged default, treated as definite information for the tax year 2014 was brushed aside by the same officer. Thus for the same issue diametrically difference treatment is visible in different tax years. Nowhere in the amendment proceedings or in the show cause notice u/s 122(9) it is clear as to how and under which provision of the law evidence of alleged liability was to be furnished while filling return under the universal self assessment scheme (USAS)? It is strange that cases wherein tax demand of Rs.678 million has been raised by the officer, the record is silent about material details/ discussion and reasoning.

FTO further ordered: “In view of above the instant case is a classic example wherein despite glaring most and blatant violations of law, departmental norms, department instructions, filing of 2nd appeal and recourse to unending litigation appear to be the preferred choice of FBR’s functionaries. Merit or no merits, right or wrong department has to stand by the order made by its officers is the rule of the game and this attitude itself is the breeding ground for unending maladministration. Such an attitude is in complete defiance of an order by the apex court. In a recent case the President has not only expressed his extreme displeasure over FBR’s apathy rather he apologized to the taxpayer who was wronged by the department without having a cursory look at very facts of his case and ordered action against all officers in the chain.

FBR is directed to issue administrative instructions to all field formations, communicating the aforesaid ruling. The FBR should also direct the Director Generals Internal Audit and Member Legal to conduct random inspections of second appeals filed and reference so as to judge the rationale and strength of departmental cases pending at appellate & judicial fora, FTO order added.

Copyright Business Recorder, 2022

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